Goods and Services Tax Class 11 Notes

Goods and service tax is an indirect tax levied at a prescribed rate on every supply of goods and services except on petroleum and alcohol for human consumption. Here are the Goods and Services Tax class 11 notes.

It is a nationwide tax seeking to unify several indirect taxes and is based on the principle of ‘One Nation One Tax’.

GST Act was passed in the Parliament on 24th March 2017 and it came into effect on 1 July 2017. GST has replaced many indirect taxes levied by the Centre and State Governments.

Central-level taxes that have merged into GST are as follows:

• Excise Duty
• Service Tax
• Central Sales Tax

State-level taxes that have merged into GST are as follows:

• Octroi & Entry Tax
• Purchase Tax
• Entertainment Tax
• VAT (Value Added Tax)
• Luxury Tax
• Taxes on Lottery

GST Rate Structure

Goods and services are divided into five slabs for the collection of GST which are as follows:

GST is paid on the purchase of goods and services and it is collected from customers on the sale of goods and services. GST paid (termed as input GST) is set off against GST collected (termed as output GST).

Characteristics of Goods & Services Tax

1) GST is a Comprehensive Indirect Tax

GST is a comprehensive indirect tax that has replaced all indirect taxes levied by central and state governments except customs duty, electricity, taxes on petroleum, taxes on alcoholic drinks, and taxes levied by local bodies.

2) Uniform GST Rates

There are uniform rates of GST across all states and union territories.

3) GST Paid is not a Cost

GST paid on the purchase of goods and services is not a cost for the purchaser but is an asset because it can be set off against GST collected.

4) GST is a Value Added Tax

GST is a value-added tax because GST paid is set off against GST collected.

Advantages of GST

1. Decrease in the Cost of Goods: The cost of goods will decrease since tax on tax is eliminated in the GST regime.
2. Ease of Doing Business: The introduction of GST has eased the doing of business because now it will be registered and administered only under indirect tax i.e., GST.
3. Developing Common National Market: GST is levied at the same rate on similar goods and services across all states and union territories.
4. Reduction in Tax Evasion: GST is administered through the computer system. Electronic return filing and assessment have reduced tax evasion and compliance costs.
5. Goods Becoming Cheaper: In the pre-GST period, there were many indirect taxes and there was no set off of tax paid against taxes collected.
6. Attracting Foreign Investment: Foreign investment in India was hindered because of multiple indirect taxes.

Types of Taxes under GST

These are the following types of taxes levied under GST:

• In case of Intra-state transactions (within the state): CGST, SGST or UTGST
• In case of Inter-state transactions (between 2 states): IGST

Source Documents Class 11 Notes

Journal Entries for GST

1) For the Purchase of Goods

Purchases A/c Dr.
Input CGST A/c Dr.
Input SGST A/c Dr.
To Bank/Creditors’ A/c

2) For Sale of Goods

Bank/Debtors A/c Dr.
To Sales A/c
To Output CGST A/c
To Output SGST A/c

3) For Purchase Returns

Creditors’ A/c Dr.
To Purchase Returns A/c
To Input CGST A/c
To Input SGST A/c

4) For Sales Return

Sales Return A/c Dr.
Output CGST A/c Dr.
Output SGST A/c Dr.
To Debtors’ A/c

5) For Purchase of Fixed Assets

Fixed Asset A/c Dr.
Input CGST A/c Dr.
Input SGST A/c Dr.
To Bank A/c

6) For Expenses

Expenses A/c Dr.
Input CGST A/c Dr.
Input SGST A/c Dr.
To Bank A/c

7) For Income

Bank A/c Dr.
To Commission Received A/c
To Output CGST A/c
To Output SGST A/c

8) For goods withdrawn by the Proprietor for personal use

Drawings A/c Dr.
To Purchases A/c
To Input SGST A/c
To Input SGST A/c

9) For goods given as free samples, loss of goods by fire or goods stolen:

Advertisement A/c (Free Samples) Dr.
Loss by Fire A/c Dr.
Loss by Theft A/c Dr.
To Purchase A/c
To input CGST A/c
To input SGST A/c

10) For Setting off Input CGST against Output CGST:

Output CGST A/c Dr.
To Input CGST A/c

11) For Setting off input SGST against Output SGST:

Output SGST A/c Dr.
To Input SGST A/c

12) For payment of GST

Output CGST A/c Dr.
Output SGST A/c Dr.
To Bank A/c

So, these are the goods and services tax class 11 notes. If you have any doubt related to the above topics, you can ask that in the comment section. We’ll give a solution to your doubt as soon as possible.